to be a "set,"
primarily because of the confluence of information contained in
them.

Introduction

To the social scientist,
nothing could be more important than an understanding of the nature of
capitalism.All major
contemporary social change involves, essentially, processes of the
capitalist system—a system so pervasive that, by the opening of the
twentieth century, the life of practically every individual on earth had
been brought within its purview.Mankind
has known no comparable culture; and, most remarkable, it probably cannot
be shown that the system originated and became viable as a “natural”
consequence of historical evolution.Feudalism
did not produce it.

Because capitalism is centered in cities, its expansion has been directly
associated with universal urbanization.It roams abroad in quest of commercial opportunities; and, in the
process, subordinates backward areas and garners a fabulous living.No earlier social system proved so pervasively and consistently
effective in motivating individuals to ambitious achievement (as I
attempted to show in Foundations of Capitalism). Indeed, unless one
is clear about the origins of the system, he may not escape the pitfalls
that await him when problems of modern social transition call for
explanation.

In this book I want to show that capitalism, as a system of societies, is
characterized by a definable order and structure which not only
differentiates it from other social systems, but also determines and
limits interactions of persons within its reach. It is an illusion
that capitalism gives businessmen unlimited freedom to plan and dispose of
resources at will.

We shall see, in due course, that it is only on the assumption of a
peculiar pattern of societal organization that the economic self-interest
of individuals can be realized as the interest of the society as a whole.In non-capitalist societies there can be no such thing as the
businessman as we know him today; he can emerge only within the economic,
political, and social structure of capitalism.(Werner Sombart, arguing from a premise of inborn personality
traits, disagrees; so do others, as we shall see.)

I have found it useful to distinguish between capitalist societies and the
universal system which these societies constitute. The term “system,”
it is true, may refer to any functional ordering of related parts and thus
to the internal social organization of any capitalist nation or territory.Indeed, this has been the more common usage. But since I seek
to emphasize the importance of the constellation of nations and
territories which has come to function as an entity under the influences
of capitalism, I use “system” mainly to denote the international
order, and “society” to refer to the internal organization of the
national units.It should be
clear that there can be no capitalist nation outside the capitalist
system. And the sequence of motivation has been predominantly from
system to society: the internal societal organization seems to depend upon
demands and imperatives arising chiefly from a play of circumstances
peculiar to the system.Furthermore,
historically, the system has, on the whole, preceded its component
societies, which were gradually included as the system expanded.

The national units of the system tend to be of unequal economic weight and
significance.Even those
powerful enough to control minor territories as dependencies tend to
cluster, in turn, around a dominant nation which sets the standard for
all.Thus, the capitalist
system comprises, functionally, a gradient of nations and territories with
a recognized leader at the top.At
all times, however, the internal organization of the leader nation tends
to be reciprocally affected by the circumstances of the led.

One obvious, though vital, conclusion to be drawn from this relationship
is that capitalism does not and cannot mean the same thing to all nations
and territories included in the system. At one extreme it may mean
for whole peoples a higher standard of living, greater freedom, and a more
complete existence than mankind has ever before enjoyed; at the other it
may mean, for great masses of people, grinding poverty, forced labor,
racial humiliation, and the lash.

Research on the structure of capitalism, then, may be directed initially
either to the attributes of the system or to the societal characteristics
of its components. It goes without saying that neither of these
aspects of capitalism can be understood in exclusion of the other; but it
seems to me that to approach the study of capitalism as a closed national
system, as has been commonly done in classical economics and other
derivative formulations, is to prepare the way to fallacious conclusions.

In Foundations of Capitalism, I discussed the unique social situation in
Venice
, which nurtured the first capitalist society. As this society
became self-sustaining, it drew into its orbit larger and larger areas of
the world.The system, I
indicated, had only one origin.Previously
non-capitalist communities became capitalist as their internal
organizations, especially their economic structures, became critically
meshed with the imperious functions of the system.A remarkable trait of the system is its cohesive strength.As noted above, it succeeded, at least up to 1914, in integrating
the peoples of virtually the entire globe.Although military force has been, and continues to be, a factor in
this achievement, the abiding ties have been forged essentially by
capitalist economics, world market relations, diplomacy, and religion.

Certain traits of capitalism are peculiar to the system as distinguished
from its national units.For
example, leadership, historically, has shifted functionally from one
nation to another—from Venice and the Hanseatic League to Holland, to
England, and thence to the United States; interunit market operations may
be distinguished from those which are intra-unit; business cycles are
peculiarly a phenomenon of the system; there is both an international and
a domestic morality; development of the system as a whole has been
distinct from the internal development of its units; and so on. In
general, economic or political changes in any of the backward
areas—assuming that the area remains within the system—do not
noticeably affect the operations of the international order.
Backward countries may even go to war without provoking important
repercussions.But any change
within the leader nation, even a minor one, may have more or less serious
consequences throughout the system.

More so, perhaps, than any earlier system, capitalism is based upon
economic relations. All other relations tend to become dependent
upon the vicissitudes of the economic order.The system itself may be likened to a global institution devised
for production and distribution of goods; hence, the hallmark of
leadership within it is dominance of international trade and production.And since this position yields superior economic advantages, the
leader naturally finds itself obliged to maintain the system which makes
its leadership possible.Traditionally
it has accepted the responsibility.

As capitalism spread its influence over the globe, all other forms of
social organization lost ground: none has ever been able to withstand the
system, and none has ever recovered once laid low.In an appropriate place, I shall try to show that, strictly
speaking, there has never been a societal renaissance in
Europe
.The ancient civilizations
never did revive; and the system, from its fifth-century origins,
experienced no “Dark Ages.”And
yet capitalism embodies its own social logic and evolution—an evolution
which, paradoxically enough, has been moving toward a fundamental
transformation of the system itself.

While the nature of the capitalist transformation is beyond the scope of
this book, 1 shall nevertheless suggest the nature of the forces involved.
The economies of leading capitalist nations can develop and prosper only
insofar as the system can expand.“Stationary
capitalism,” as Joseph A. Schumpeter remarks in point, “is
impossible.”The more these
nations increase their potentialities, however, the greater the pressure
for lebensraum, which must be found mainly in the world’s underdeveloped
areas.Barring organizational
and technological innovation, it is in the backward countries that the
dynamics of capitalism center; they constitute the critical open end of
the system. But since 1917, when the Russian Revolution eliminated a
vast area of the world from the operations of capitalism, this critical
space has been actually contracting.Moreover,
the remaining backward countries have been showing increasing resistance
to normal capitalist expansion.The
result of this twofold countermovement has been the aggravation of
economic stagnation within the system.

The
essential culture of capitalism tends characteristically to be most highly
developed in the leader nation. Thus the latter ordinarily becomes
the model of perfection of capitalist organization.During the period of its ascendancy, the leader surpasses all
others not only in the magnitude of its commerce and industry but also in
the felicitous accommodation of its political and religious institutions.There are also reasons why the leader’s science and technology
always tend to be superior.It
shall be my purpose to relate these vital aspects of capitalist society to
the dominant phenomena of the system as a whole.

The study of capitalism, I need hardly say, has been a long-time
preoccupation of both social scientists and practical men of
affairs. In deriving his provocative doctrines on government,
Machiavelli assumed its existence; the physiocrats and mercantilists were
primarily involved with arguments about and explanations of its processes;
Adam Smith thought he understood these processes better than the
mercantilists; indeed, all social theories about modem non-socialist
society, at least, take capitalism for granted.In Part II, I shall attempt to review the pertinent contributions
to the subject of some leading students.

An analysis of these conclusions will, no doubt, help to define more
clearly my own point of view. My primary concern in the following
pages will thus be to analyze and characterize the significant economic
and social phenomena of the capitalist system as they manifest themselves
in its economic structure, its societal matrix, and its dynamics.

All
rights reserved.No part of
this introduction may either be reproduced or transmitted in any form or
by any means, electronic or mechanical, including photocopying and
recording or by any informational storage and retrieval systems, without
prior written permission from either the copyright owner or the publisher, except for
inclusion of brief quotations in a review.